First dollar coverage refers to a plan that pays deductibles and co-payments so that the beneficiary has no out-of-pocket costs. In Medicare, some supplement insurance plans (Medigap) offer first dollar coverage. First dollar coverage has become controversial in the current debates over Medicare costs and policies as it supposedly correlates with higher utilization rates of services. Some argue that this means that beneficiaries may use unnecessary services or that doctors recommend unnecessary tests and procedures. Others argue that some beneficiaries use it as needed while those without it forgo health care services due to costs.
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